>> this was another step forward for the labor market. it wasn't a giant step forward, but it was a step forward. >> susie: the unemployment rate drops to the lowest level in more than two-and-a-half years. >> tom: the news comes as wall street wraps up its biggest weekly point gain in over three years. it's nightly business report for friday, december 2. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. the nation's unemployment rate now stands at 8.6%. this is its lowest level in two- and-a-half years. the steep drop in the november jobless rate surprised economists. tom, they expected it to remain stuck at 9%. >> tom: everyone focused on that number, susie. but the other number in today's report was the number of jobs created last month. the american economy added 120,000 jobs in november led by new jobs in the retail industry. >> susie: out of work americans are now hoping that their job prospects have improved. suzanne pratt takes a look. >> reporter: from wall street

trading floors to holiday shoppers at the mall, americans are wondering if the latest look at the labor market is for real or a big fakeout. sure, the widely watched survey of employers showed 120,000 jobs were added last month. but, there was a lot of head- scratching about the big drop in the nation's jobless rate. the decline stems mainly from a decrease in the size of labor force. in other words, people stopped looking for work-- not a good sign. experts say on top of that the

unemployment rate comes from a small survey of households that can be volatile. economist aneta markowska explains it showed nearly 300,000 new jobs in november-- a lot more than the payroll survey. >> for this to be believable, you would have had to see g.d.p. growth in the order of 5%, and we're just not quite there. so the idea that we can sustain 300,000 jobs per month i think that's a bit of wishful thinking. >> reporter: statistical noise perhaps, but other economists say it's still positive news on the job market. >> maybe this is overstating the current picture in november. at the same time it's descriptive of which direction unemployment seems to be headed right now. >> reporter: and, it turns out companies have been hiring more workers than originally thought. the job market added 72,000 more jobs combined in september and october than originally reported. >> when they get a bigger sample of the employers, they're finding even more jobs than they did on the first count of the second count. and, that is in itself a good cyclical indicator that things are improving. >> reporter: still, many experts worry the job gains won't be sustainable in the new year, particularly with all the economic obstacles. >> we have some serious fiscal issues here at home. big questions about the stance of fiscal policy as we get into the early part of the year. given those headwinds we shouldn't get too excited about the recent strength in the data. >> reporter: whether or not you

believe in the latest snapshot of the labor market, experts say there's no denying the fact that conditions are improving. one month does not make a trend does not make a trend, but several months of decent job growth certainly do. suzanne pratt, "nightly business report," new york. >> tom: the improved u.s. jobs numbers couldn't ease investors worries that europe is still far from fixing its debt crisis. adding to those worries, german chancellor angela merkel's call for decisive action to fix the debt crisis gripping the euro- zone. she also said the crisis quote, "will not be fixed in one fell swoop." u.s. stocks closed flat. the dow and the s&p 500 fell about half a point, while the nasdaq rose about that much. today's flat performance couldn't take away from a stellar week. the dow surged 788 points or 7% on the week. it's best weekly performance since july of 2009. the nasdaq also rising over 7% with a 185 point gain on the week. the s&p 500 tacked on 85 points or 7% on the week as well. >> susie: still ahead, with

american airlines flight into bankruptcy, the company and its workers are still facing a pension crisis. >> tom: a congressional panel today subpoenaed former m.f. global chairman jon corzine. he's being compelled to testify before a house agricultural committee hearing next thursday. the committee wants answers on the m.f. global's sudden collapse into bankruptcy in late october. corzine is a former u.s. senator, governor of new jersey and c.e.o. of goldman sachs. he has also been asked to appear before the senate ag committee in mid-december. >> susie: ten years ago today, enron filed for bankruptcy. the once powerful energy firm came crashing down in the wake of a massive accounting scandal. our guest tonight is the woman who exposed that fraud: sherron watkins. she was enron's vice president for corporate development and warned enron's top executives that there were misstatements and other shenanigans in the company's financial reports. known as "enron's whistleblower," watkins was

selected by "time" magazine as one of its "persons of the year" cover in 2002. as we continue our series "enron-- 10 years later," we talk with sherron watkins. sherron, thank you so much for joining us tonight. we really appreciate your presence here. lots to ask you. let me just begin by asking. you have had ten years to reflect on this spectacular collapse of enron. what do you think was really the key reason behind the collapse? >> well, i actually think it's an excessive use of stock options. that when all the employees and the top executives are fearful about the stock price declining, you start really gambling the company. you take on excessive risk when you really just cannot see a stock price decline. >> what do you think now of all this talk to repeal share babs oxley. the view is-- share bains observationly. the view is that all these views and all these reforms

have done veriological to prevent other fraud and financial crises and they say it is time to repeal this, what are your thoughts? >> well, let's not look at repealing, you know, sharbanes-oxley. obviously something was needed. when they coulds lad, all those 2002 collapses, congress looked at stock options, but was pushed back. we've got to look at why our compensation system are incent vising this gamble the company risk that was epitomized with the 2008 collapses. >> susie: so what would you like to see happen? it has to be more than just stock options. there's a lot of things that are not quite right with the system that we see. the financial crisis, mf global recently, countrywide, what is behind all of that? >> well, when you really look at inside those companies, even within leeman brothers they had risk management folks that

were ph.ds, very bright that were warning company executives of impending doom. they had just, they were no longer listened to. so what was the incentive y were executive those longer listening to their own risk managers. and we need to do two things. we passed allow in 1993 here in the united states that c.e.o. salaries above a million dollars could not be deducted on corporate tax returns and that had a horrible unintended consequence. people that were making above a million, the difference had to be made up and it was made up typically with stock options. throughout the 90s, i mean enroll all right tad-- really started handing out some of in stock options it was amazing. and it made us all very tied to our earnings and our earnings growing, growing the company. and really dampening any voices that might be cassandras or you know, people warning of too much risk. so is there any great lesson s there any great lesson that comes out of this enron

on its ten-year anniversary? what is the moral of the story here? >> well, let's look at the root causes. and it's a simple fix. it's just not pain free. other experts have proposed it. we do away with that 93 law, we repeal that so salaries at any amount can be deducted. but you say cash only compensation for the c class executives. if they are worth 15 million a year, pay them 15 approximately but no more stock options, no more stock grants. is that really so awful? it does take away the incentive for short-term risk. and it needs to be addressed. we can't have another 2008. and i don't think we've fixed the problems. >> no one wants to have a repeat of that,s that's for sure. thank you so much for coming on our program, pleasure having you. >> thank you for having me. >> and we have been speaking with sharon watt kins can, a former vice president at enron

>> tom: the ipad is the undisputed leader of tablet computers. but amazon's new kindle fire is coming on strong. it's been on the market for just a month, but research firm i.h.s.i.-suppli says amazon is on track to ship almost four million devices this quarter. that would give it the second largest market share of tablets at 14%. i.h.s. believes apple's ipad will continue to dominate with an estimated 65% of the tablet market.

>> tom: after a strong start thanks to the drop in the unemployment rate, the major stock indices closed with just small moves by the closing bell. right out of the gate, the s&p 500 saw a nice pop and climbed to its high of the day about an hour into the trading session. then the stream came out and the index trended lower through-out the afternoon, to end with a fractional lose. moving the market, the financial sector gaining almost 1.5%. while the health care sector was the biggest drag, falling more than 1%. big bank stocks made some big moves today. morgan stanley, j.p. morgan and citigroup each rallied at least 4%. with this week's central bank action making it cheaper for european banks to borrow dollars, banking stocks saw some sharp rallies. let's break out j.p. morgan and look at just the past 30 session. with today's jump and

wednesday's big rally, the stock is at a two and a half week high. just this week, shares rocketed up 13.5% from $28.50 to over $32 per share. research in motion has been struggling, competing against the iphone and the ipad. it's tablet computer, the playbook has not sold well. so rimm is marking down the value of its playbook inventory, taking a $485 million non cash charge. it also cut its earnings and revenue outlook, warning of a drop in the shipment of its blackberry device. shares of research in motion continue sliding, down almost 10% today. volume was triple its usual rate. over the past year, shares have lost almost three quarters of their value. the lines continue blurring between phone companies and cable companies. today, verizon wireless agreed

to pay $3.6 billion to three cable companies for their wireless airwaves licenses. it's one way for verizon to increase its wireless network capacity. comcast, time warner and the privately held bright house networks bought the wireless licenses for just over $2 billion in 2006. today's sale price was more than 60% higher. the stocks of the major players in the deal all caught a bid today. verizon was up a fraction. the sellers, comcast and time warner cable were up 3.5% and almost 5% respectively. the deal puts pressure on the third quarter was a big disappointment for retailer big lots. earnings came in three cents shy of estimates. the company also is worried about whether consumer can sustain their strong buying patterns from thanksgiving weekend. that send big lot shares lower, falling 8.5%, down to a six week low. volume was heavy today. computer hard disk drive makers have had a tough go of it recently thanks to flooding in thailand hurting production. but western digital stock shot up after it raised its outlook thanks to resuming manufacturing in thailand.

that sent shares of rival sea- gate lower. sea-gate had been expected to gain business while western digital was hurt by the flood waters. and that's tonight's market focus. >> susie: a last-minute deal between the nation's major freight railroads and three rail unions has averted a possible strike. it could have shut down rail lines across the country. an agreement was reached last night with two main unions. a third one agreed to a cooling off period until february. the agreements call for raises of more than 20% over six years. estimates put the cost of a freight-rail work stoppage at about $2 billion a day. >> tom: the american airlines bankruptcy has set in motion a complicated negotiation over who will keep the commitments the company has made to 130,000 retirees. american's parent company a.m.r. could wind up terminating its pension plan, leaving the federal pension benefit guaranty corporation on the hook. but, as darren gersh reports, that is not a foregone conclusion.

>> reporter: by terminating its pension plans, american airline's parent company amr could save more than half a billion dollars a year. it would also see its costs fall in line with its competitors. but first, american will have to prove to the federal government that it doesn't have the cash to cover the promises it made to its employees. >> if we disagree, we're not shy about going into court and saying, "your honor, this is a company that can survive and keep its pension plan." >> reporter: josh gothbaum heads up the pension benefit guaranty corporation, the federal agency that insures pension plans. if american walks away from its plans, he says retirees will still get a check. >> some of the benefits that they would have gotten from american, we can't pay. and that's unfortunate. and the other thing, which is also true, is that at that point, we will become a very large creditor of american airlines and we will-- so okay, what can we get in exchange for having taken on your obligations. >> reporter: american airlines says it hasn't made a decision

on its pension plans. but if it does shift the plans to p.b.g.c., it will likely have to give the p.b.g.c. stock in the company that emerges from bankruptcy. analysts expect amr will be able to show it can't pay creditors and fund its pension plan. >> if you use past airlines as precedent, i imagine amr will be able to remove a good portion of that liability. >> reporter: the p.b.g.c. already has a $26 billion deficit. american airlines could add $9 billion to that shortfall, sending the funding gap soaring to $35 billion. >> the question is, where do the dollars come from? and that's why a lot of people believe that at the end of the day, the taxpayer is going to be called upon to bail out the federal pension insurance system. >> reporter: that insurance system is in the red because its biggest clients are troubled industries like steel, airlines and auto parts. >> there's no new blood coming in to replenish the insurance pool.

so, insuring a die-dying industry is just not practical in this day and age. >> reporter: for now, though, the p.b.g.c. has $80 billion in assets to cover a $4 billion annual shortfall in pension payments-- not an immediate crisis, but also one without an immediate solution. darren gersh, "nightly business report," washington. >> tom: here's what we're watching for next week: our friday market monitor guest is duncan richardson, chief investment officer at eaton vance management. we'll also see the october reports on consumer credit and wholesale trade inventories. monday, our word on the street is technology-- a look at three top tech stocks for the new year. >> susie: republicans in the house of representatives plan to link payroll tax cut legislation with a plan to speed up approval of the controversial keystone pipeline. the move is designed to turn up the heat on president obama, whose administration has put the keystone x.l. pipeline on hold.

it would make opposing the pipeline difficult for democrats because extending unemployment insurance and payroll tax cuts this year are priorities for the party. >> tom: honda has expanded a recall to replace driver side airbags. nearly 300,000 honda and acura vehicles are affected by an airbag problem that could be deadly. honda says so far, there have been 20 accidents related to the problems, including two deaths in the u.s. in 2009. the recalled honda models are the accord, civic, odyssey, pilot and cr-v built in 2001 and 2002. two acura models from 2002 and 2003 are affected. the airbag problem has led to the recall of nearly two million hondas since 2008.

>> tom: from calamity to a chronic problem-- that's the best case senario for europe according to tonight's market monitor. james paulsen is the chief investment strategist at wells capital management. he joins us from minneapolis, minnesota.

into a world catastrophe. if we could move it to cranic problem. >> consumers can call out, a lot of better things. i really think that's a reason to occur here over the next few years if europe has calamity wa, does that mean for the u.s. economy. >> well, i think what it means is mostly it would improve confidence in this country. so companies that are sitting on 2 trillion of cash and they're going to stay that way until they feel like europe's to the going to blow them up, if they start feeling like the u.s. economic recovery is going to sustain, then i think some of that $2 trillion in cash might start to come off their balance sheet. and the same thing with investors that are avoiding the stock market. they might start feeling more confident to buy again.

>> how about today's job numbers. how do those play into it we saw a nice drop down not unemployment rate, mathematical aberration or not. it's still a pleasant surprise. >> it is. i think we're making, you know, slow but steady progress on the job front, tom. last year we created just shy of 100,000 payroll jobs a month. and so far now through the first 11 month os we've created about 155,000 a month. i think next year we might create about 200,000 a month and the importance of that is as you go from about 150 to 200 a month, the unemployment rate starts to come down. and that's what we saw today. ifs that sustains, i think that could be better than anything in terms of building confidence throughout the economy. >> tom: jim, i want to get to your two new picks here, and they are related. we will show the charts back-to-back. first is the industrials exchange rated fund here at 33, almost 34 dollars per share. xli. and you also like basic materials, xlb the ticker symbol. we're using exchange traded

funds, why these two? >> well, for the industrials i really as a general statement really like the manufacturing sector, tom. i think it got hit really hard by the japanese tsunami which created all sorts of manufacturing supply change problems and we're now just starting to revive as the japanese economy bounces back. just yesterday we found out that auto sales in the united states reached new high force this recovery cycle after dying immediately after the tsunami. i think as that occurs, you are going to see the greatest profit leverage in the u.s. manufacturing sector particularly in the u.s. industrials. as far as the basic materials are concerned, i think that you get the added kicker that the dollar, the u.s. dollar i think is going to weaken a little bit over the next several months particularly if european fears decade-- decay and as the dollar weakens it could put a bid under commodity prices. >> tom: we saw that this week with the action by the u.. if federal reserve and other bankers t was risk on am we saw commodities pop and

equities prop. we last saw you april 29th with as fate would half it the top of the market here. tough time to check on these picks but you liked eem, down 20.5%, technology etf down 4%. would you put new money to, without, have you closed out these positions? >> well, the technology i am not as enamoured with, mainly because as you mentioned it held up quite well it outperformed over that period. but the emerge markets i really do like. i have been wrong in that since april but i think that the emerging officials are turning to easing and lower interesting rates. and i think those stocks are going to maybe be among the leaders here over the 2012 outlook. >> tom: i know we used eft-- etf for illustrative purpose, do you or your clients have any positions. >> not in the etfs. >> tom: our market monster, james paulsen, with us from wells capital management. >> thank you.

>> susie: finally tonight, we wrap up >> susie: and finally tonight, we wrap up this jobs friday with one veteran's two and a half year journey from retirement back into the workforce. as peter christian explains in tonight's "you're hired," older workers like him still have a lot to offer. >> my name is peter joseph christian, smelled with a "c" i was hired to train for maintenance, janitorial, grounds keeping and also be a floater to fill in for security. the job that i am doing today is the grounds keepers job. i had a feeling i was to the going to find another job. now i'm going to water the planters. >> i'm 65 december 12th. >> my first repair of the day, okay? jobs are not all that plentiful. and the ones that are hurting the most, senior citizens and veterans. it's a shame because these people have all kinds of skills, talents, abilities.

and a lot of them can still put in a hard day's work. all they're looking for is an opportunity and someone that will take a chance. >> i kept trying. i kept trying and encouraging myself. >> once they saw my resume they took a look at that and they decided you're the one we're looking for. >> hello. >> even though the economy is bad, even though there is not a whole lot of jobs, you want something bigger and better? go after it. >> tom: still a lot to give. that is nightly business report for this friday, december 2nd. goodnight everyone and have a great weekend, you too susie. >> susie: good night, tom. i'm susie gharib have a great weekend everyone. we hope to see all of you again next week. "nightly business report" is made possible by:

this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org